Kahn the Barbarian : Technology: Philippe Kahn's Borland International has made a fortune by snubbing traditional ways. But some say success may dull the software company's competitive edge.

SCOTTS VALLEY, Calif. — Borland International Chairman Philippe Kahn was reading a dense history of Central Asia a few years ago when it struck him that many of the nomadic tribes of the steppes were actually far more ethical and disciplined than the European "civilizations" they were confronting.

They were austere and ambitious, eager for victory but not given to celebrating it. They were organized around small, collaborative groups that were far more flexible and fast-moving than the entrenched societies of the time. They were outsiders and proud of it. They were barbarians.

And Kahn wants "Borlanders" to be like them. Barbarians not bureaucrats, as the high-flying software company's unofficial slogan proclaims.

To a remarkable extent, Kahn himself has succeeded in living by the barbarian code. He's the consummate outsider, a French mathematician of Jewish origin who was an illegal alien when he launched Borland in 1983. Both personally and professionally, the motorcycle-riding, saxophone-playing Kahn has broken all the rules, carrying out a legendary series of outrageous stunts even as he came up with some of the most important technical and marketing innovations in the software business.

And to the amazement of critics who once dismissed Kahn as "that crazy Frenchman," Borland is now an industry powerhouse. With the acquisition of Torrance-based Ashton-Tate last year, Borland became the third-largest company in the PC software business, with annual revenue of about $500 million. To Microsoft Chairman Bill Gates, the emperor of PC software, Kahn and Borland are suddenly a major competitive threat.

Yet the very success of Borland poses an important challenge to the carefully crafted barbarian culture. Too many victories, as the barbarians of Eurasia discovered, can breed hierarchy and complacency. Borland must now maintain the ethos of the scrappy outsider even as it evolves into a market leader.

On a more mundane level, the $440-million Ashton-Tate acquisition brought some costly surprises. Borland took a $103-million restructuring charge--considerably more than the $80 million initially anticipated--to cover the cost of absorbing Ashton-Tate and shutting down the Torrance headquarters.

In addition, Borland is now grappling with the tricky task of integrating Ashton-Tate's key product--a program for managing large amounts of information on a personal computer--into its own product line, which already includes a database package called Paradox. The company has committed to supporting both products while building bridges between them.

Finally, Borland is racing to complete a series of new products--including databases and a financial spreadsheet that work with Microsoft's Windows software program--that it hopes will bolster the lackluster financial results of recent months. Though early reviews of the products have been very favorable, they will arrive months later than expected.

"They have a lot of challenges in front of them right now," says Nancy McSharry, an analyst with International Data Corp. "A lot of people are looking at these new products as bellwethers for where the company is going."

For the 39-year-old Kahn, a bear of a man whose girth belies his devotion to sports, such challenges are the stuff of life. He concedes with a shrug that Ashton-Tate, the once-dominant database software vendor that began to spiral downward several years ago, was in even worse shape than he thought, but remains convinced that it was a good acquisition.

Kahn also brushes off any suggestion that Borland's rapid growth might prove difficult to manage, or that control is too centered in his hands. (Kahn is president and chief executive of Borland as well as chairman.) As for the idea that Borland might be getting too entrenched to play the barbarian, well, he doesn't have to worry about that as long as there is a Microsoft.

"Absolute size is one thing but it's relative size that really makes a difference," he says in his slightly lilting English. "Microsoft is, what, six times . . . five times bigger than we are? They're very large, so you've got to be better, you've got to be leaner, you've got to move faster."

Microsoft, in fact, is a defining presence for Borland. While Lotus Development Corp., Borland's rival in the market for spreadsheets, is regarded with thinly veiled contempt in Scotts Valley, Microsoft is admired for its technical and managerial competence even as it's loathed for allegedly unfair business practices.

The similarities between Microsoft and Borland are striking. They are the only major firms in the PC software business that have competed effectively in more than one product category. Both pride themselves on their technical acumen and corresponding ability to attract and keep engineering talent.